Payment of consultancy fee to director

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 December 2011 Dear Members,
The Director of Holding (unlisted) Company is acting as Technical Consultant in its wholly owned subsidiary company and getting(Rs. 1.25 Lakh pm plus service tax.

Is it attracts Sec.314? if so which company has to pass special resolution? Is CG approval require? He is holding such position for since 2005, please share your ideas.
NB: he is acting as consultant before getting appointed as Director in Holding Company. (Date of Appintment: 2003, acting as consultant from 2001 onwards, but consultancy fee increase once in 3 years)
With many thanks
K Degaleeswaran

CS Mitesh Mehta

CS Mitesh Mehta (Expert)
Follow

27 December 2011 It has been held by the Bombay High Court that, where a director provides services by holding a whole-time position under the company, he would be deemed to be a whole-time director and his remuneration will be governed by the provisions of section 198 & 309 read with Schedule XIII. Section 314 is not applicable in such a case.

Where a director provides the services on a case-to-case basis or on a regular or retainer basis, the provisions of sections 198, 309, etc. and that of section 314 are prima facie applicable.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now